BILL WHO? 9 Things Steve Ballmer Has Done To Make Microsoft Better

Steve Ballmer recently claimed that he “got a new job” when Bill Gates quit his full-time position at the company in 2008.

Ballmer has been Microsoft’s CEO since 2000, but Gates was a huge presence, and Ballmer deferred to him on a lot of product strategy decisions, according to a former high-level employee.

So what exactly has changed since 2008? How is Ballmer leaving his mark on the company?

The propellerheads are in charge.

This is the most obvious change: since Ballmer can no longer rely on Gates for technical assistance, he has put technical people in charge of every single product group.

Previously, product group leaders often came from the sales organisation -- Kevin Johnson (who led Windows and Online from 2005 to 2008) and Jeff Raikes (who led Office and other business software for nearly a decade) are prime examples. They were usually balanced by technical people lower in the organisation, as well as by Gates and his technical advisers like Ray Ozzie.

Since 2009, that has changed completely -- every product group now has a technical person in charge. Ballmer brought in engineer Qi Lu from Yahoo to run the Online group, and he put techies like Steven Sinofsky (Windows), Kurt DelBene (Office), and Satya Nadella (servers and cloud), and Don Mattrick (Xbox) in charge of the other groups. Last month, Ballmer swapped out Windows Phone head Andy Lees, who had more of a marketing background, for Terry Myerson, who had run Windows Phone engineering.

There's less fighting and more cooperation between groups.

Microsoft has long been known for its infighting and Darwinian competition among groups -- different product groups would work on products that solved essentially the same problem and let the market pick a winner.

Ballmer has encouraged more cooperation and coordination between product groups. One example: the Windows Metro interface of sliding menus, which was originally designed for Windows Phone, is now being pushed into Windows, Office, and Xbox Live.

Failures are killed quickly.

Ballmer is quick to pick winners and kill products that aren't working, especially if they serve no larger strategic purpose. (Bing may be expensive and growing very slowly, but Microsoft needs it to keep Google from cornering search advertising.)

The best example of this is the Kin phone, which was on the market for only a few weeks before Microsoft pulled it and focused all attention on the much better Windows Phone platform. In the last couple years, Microsoft has also killed losers like the Zune MP3 player, some small business accounting products, and Office Live.

Bill Gates' interest in pet products like SPOT watches and Windows XP tablets kept those products alive for years, even when they weren't selling.

Base hits are important.

Windows Longhorn -- the original codename for what became Vista -- almost sank Microsoft. Two years into development, the company scrapped a lot of what they'd been working on and started over, and Vista eventually took almost five years to get out the door.

The quality problems were bad enough. But the delay was almost worse, because most big companies buy Microsoft software on three-year contracts, with upgrade rights included. If Microsoft can't deliver, they're less likely to sign up next time.

In the last five years, Microsoft has become much more predictable -- Windows, Office, and most major server products are coming out like clockwork every two or three years. The method for doing this comes largely from Windows chief (and former Office head) Steven Sinofsky, and Ballmer has imposed it on most of the rest of the company.

The Yahoo and Nokia partnerships are the new come-from-behind model.

When Microsoft wanted to enter a new market, it would make a decision: build or buy. For search, it built Bing from scratch (then added technology from acquisitions later). For business management software, it bought Great Plains and Navision.

But in the last couple of years, a third way has emerged: partnerships.

It started after Yahoo rejected Microsoft's buyout offer in 2008. A year later, Ballmer sat down with Carol Bartz and hammered out a deal to put Bing results in Yahoo's search listings, trade intellectual property, and swap some employees and job duties. Last year, Ballmer struck the same kind of deal with Nokia to try and come from behind in the mobile phone market.

Microsoft has struck plenty of big partnerships in the past, like with cable TV providers in the 1990s, but they usually involved taking an equity stake -- Microsoft was basically buying market share or product placement. The new partnerships are more like cooperation among weak equals against a stronger competitor.

Xbox got serious about home entertainment, not just gaming.

Ever since the Xbox 360 launched in 2005, Microsoft has talked about it as being more than a gaming device -- it was supposed to deliver all kinds of entertainment to the living room.

But for the first three years, this was mostly an empty promise. Microsoft signed a deal with Netflix in 2008, but it took new leadership to really push the group in this direction.

Ballmer appointed Don Mattrick to lead the Xbox team in early 2010, pushing Robbie Bach and J Allard out the door. Since then, Microsoft has signed deals with dozens of TV providers, from ESPN to Comcast, and launched Kinect, which adds voice and motion control and makes the console much more approachable to non-gamers.

The company is really, truly serious about the cloud.

Microsoft has paid lip service to the Internet and software-as-a-service for a decade, but in 2008 it started to release actual cloud computing services like the BPOS (a Microsoft-hosted version of Exchange email and other products) and Windows Azure (an answer to Amazon Web Services).

Since then, Ballmer has pushed the importance of the cloud at almost every speaking opportunity, and last year he was front and centre at the launch of Office 365, Microsoft's latest cloud-based business service. (In contrast, he did not introduce the preview of Windows 8, but left it to Windows chief Steven Sinofsky.)

He even replaced the long-time leader of the Server & Tools (infrastructure) business, Bob Muglia, with Satya Nadella, who came from doing engineering work on a massive-scale online business -- Bing.

Patents are a weapon.

Back in the early 2000s, Microsoft decided it needed to fight back against Linux, the open-source operating system that was catching on in data centres. One way Microsoft did this was to find patents that Linux might infringe upon, then approach Linux resellers and distributors and demand licensing fees. When the resellers agreed, Microsoft publicized the deals, putting other Linux companies on notice.

People who worked for Microsoft at the time say that Ballmer was directly involved in hatching that strategy.

There's much less forward guidance.

Microsoft used to release detailed guidance for coming quarters and years, but it stopped in early 2009 after the economy collapsed it blew its estimates for the end of 2008. It has never resumed.

Since then, Microsoft has also scaled way back on its annual Financial Analyst Meeting, where it used to lay out its product strategy and give guidance for the coming fiscal year. Microsoft has also clamped down on future predictions in its earnings calls, especially since Peter Klein became CFO in late 2009.

Now, meet the people who Ballmer depends on most...

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